It is hard to believe how much change has taken place in the world over the past few months. The rapid spread and impact of COVID-19 forced employees around the world to transition to working remotely, requiring companies and their employees to adapt every process including accounts payable (AP), to new working environments at warp speed.
As a result, organizations have had to take additional steps to protect themselves from loss while trying to grow profits. So, how are they minimizing risk, managing governance reviews and re-establishing processes and controls in a work-from-home environment? And, what are some ways they are adapting to new AP risk now and for the rest of the year?
Adapting to the delicate balance of mitigating risk and increasing revenue is a critical skill that financial professionals must develop. Here are four considerations for companies looking to limit financial risk during these uncertain times:
- The impact of working from home
- Limitations to process automation
- Visibility into team performance
- New tools and technology shifts
The impact of working from home
In some regions of the world, Wi-Fi connectivity is limited, and IT security protocols are suspect at best. As a result, companies are forced to reprioritize and reassign tasks throughout their organization. For example, a company may have shared service locations in regions of the world that have a less advanced IT infrastructure. This limited connectivity can make it difficult to manage certain processes in a work from home environment. The company may decide to migrate various tasks or workstreams to other areas or departments to limit that instability. In doing so, however, they may run into issues with their segregation of duties – having more than one person complete a single task as an internal control intended to prevent fraud and error – and have little choice but to reassess and mitigate new risks brought on by the shift.
Additionally, remote work has forced some AP staff to shift from using multiple screens in the office to one screen at home. Having one monitor versus two or more can make the accounts payable process slower and more prone to errors.
Limitations to process automation
Accounts payable processes are normally 90-95% automated, yet there are workarounds for the remaining processes that are outside the realm of out-of-box enterprise resource planning (ERP) solutions. This can include anything from an odd receiving procedure to a one-off shipment. The outlier parts of the process that are not automated are more subject to items slipping through the cracks – potentially leading to significant amounts of lost revenue. To minimize risk, companies should step back and to scrutinize the unautomated process flows to look for potential process gaps that could lead to errors.
Visibility into monitoring team performance
While in the office, managers are able to gain information regarding employee performance through water cooler conversations and quick chats that come from walking through the office. Additionally, the high volume of in-person meetings and formal employee and team check-ins all serve as ways for leaders to gather additional insights needed to gauge a team’s productivity and identify potential bottlenecks. When working remotely, these “softer” key performance indicators (KPIs) are much harder to come by.
For finance leaders, having a line of sight into team productivity is critical when trying to manage the AP process remotely. Knowing which factors – whether they are related to technology, feelings of disconnection from the larger team or even difficulties working from home – are impacting team performance can be key in maintaining productivity.
Expanding your metric reviews to include additional indicators or more frequent reporting can help provide additional insight into the effectiveness and efficiency of your AP process.
New tools and technology shifts
When a crisis strikes, companies are sometimes forced to put existing corporate initiatives on hold and accounts payable is no different. The impact of COVID-19 meant that many companies shifted project implementation resources toward launching tools and technology that enabled working in this new world. Perhaps it was automating a spreadsheet upload, or even just expanded use of SharePoint or Zoom. While these are frequently used commercial products, they do pose risk as they are used to share and process company data. While the original goal may have been to arm employees with the resources to do their jobs during a transitioning work environment, companies should now take the time to step back and re-assess how they are sharing information across the organization. This includes, but is not limited to confidential data, that is discussed and shared between AP teams and leaders.
Evolving the AP process
There’s no doubt that these are challenging times for both businesses and employees. As the workplace of the past has evolved to keep up with the changing business landscape and global climate, the AP process must evolve as well. Now is the time for finance leaders to take a deep dive into their current AP processes and examine how the process has evolved in the last few months. This can include looking at each step of the AP process and asking:
- How has the process changed?
- Are all key controls still in place?
- Is there still a segregation of duties?
- Are there individuals or departments that need additional training?
Companies could take the review process a step further and consider leveraging an AP recovery audit as a best practice. While there is always some risk of error in AP transactions, an AP recovery audit can highlight potential process risks, help implement remedies and return lost cash to an organization. Leveraging an AP recovery audit is already a best practice, and given the current business and economic landscape, it makes more sense than ever.